Expert's View

Reg Jones

Last week I went over the basic rules governing the Federal Employees Health Benefits program, an important subject during every open season enrollment period including the one that started Monday (November 8) and that continues through December 13. This week I want to point out what happens when you retire.

As a rule you can carry your FEHB coverage into retirement if you have been continuously enrolled in the program for the five consecutive years before you retire or from your first opportunity to enroll in the program. However, there are exceptions to that rule.

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For example:

• if you transferred from a position that didn’t provide FEHB coverage to one that does and you retire before completing five years of coverage;

• if you are covered by Tricare or CHAMPVA, that time will count toward the five-year requirement if you are enrolled in an FEHB plan when you retire;

• if you take early optional or discontinued service retirement with or without a buyout;

• when it would be against equity and good conscience not to do so. However, such waivers are exceptionally rare.

Assuming you can continue your FEHB enrollment into retirement and do—which is the case for the large majority—with one important exception you will have the same choices during the annual open season (or on experiencing certain life events) as an active employee. Here’s that exception: while employees can newly enroll during those opportunities, retirees can’t (unless they are reemployed into a position conveying FEHB eligibility). So think long and hard before dropping FEHB as a retiree.

While you are still employed, Medicare Part A (Hospital) deductions are taken from your pay. When you retire those deductions will stop. And when you are eligible for Medicare – usually at age 65 – your FEHB benefits will stay the same.

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Moving on, if you are covered by Medicare it will become the primary payer of your medical bills and your FEHB plan will become the secondary payer. However, that’s only true when both provide the same benefit. If Medicare provides a benefit that your plan doesn’t cover, it will be the sole payer. Conversely, if your FEHB plan provides a benefit that Medicare doesn’t, it will be the sole payer.

You paid for Medicare Part A coverage through payroll deductions while you were working. You won’t have to pay a penny for that benefit when you retire. However, if you want to enroll in Medicare Part B (medical) and/or Part D (prescription drugs), you’ll have to pay for that out of your own pocket.

Medicare Part C (Medicare Advantage Managed Care) is offered through private insurers and is only available to retirees who are enrolled in both Medicare Part A and B. If you enroll in Medicare Part C, you can suspend your FEHB enrollment. Suspending that coverage rather than cancelling it means that you can re-enroll in the FEHB program during any Open Season or at any time if your Part C provider stops offering coverage.

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